Brazil, the largest economy in Latin America, is experiencing a very positive economic outlook so far in 2024, with projections of growth driven by agriculture and boosted by household and government consumption. The country’s central bank has recently cut interest rates to 13.25%, a move that could help keep inflation low and further stimulate economic growth.
Foreign Direct Investment (FDI) has also helped in Brazil’s recent economic development, providing access to new markets, technology, and skills. In 2022, FDI inflows reached a historic high of $224.579 billion, a 55.2% increase from 2021 levels. This growth can be attributed to the increase in earnings reinvestment and the expansion of the services sector. Spain has been the second main foreign direct investor in Brazil, with a stock of USD 48 billion in 2022.
President Luiz Inácio Lula da Silva has emphasized the importance of FDI in driving the country’s economic growth, particularly in the renewable energy sector. Brazil already has a mostly renewable energy matrix, with more than 80% of its electricity coming from renewable sources, led by hydropower, and solar and wind energy expanding rapidly. The government has signed onto a global agreement to triple renewable energy globally by 2030 and shift away from using coal. Lula’s administration is also promoting a “Green Plan” to transition away from fossil fuels, which includes the “Solar for All” program to install solar panels in underserved communities and lower electricity costs.
The renewable energy sector is not the only area attracting foreign investment in Brazil. The potash market is another sector set to experience rapid growth in the coming years. Brazil is heavily dependent on imported potash, a crucial ingredient in fertilizers for the country’s agricultural industry. The Autazes Potash Project, owned by Brazil Potash, aims to reduce this dependence by extracting potash from the Amazon region to supply the agricultural sector in Brazil.
The Autazes Potash Project requires an estimated investment of $2.5 billion, with the goal of producing 2.2 million tonnes of potash annually, meeting 20% of the national demand for this essential agricultural input. The project is expected to generate around R$25 billion over 23 years and create 15,000 direct and indirect jobs. Brazil Potash has secured an offtake agreement with agricultural giant Amaggi, ensuring a steady market for its production, and is actively working on funding prospects with international development banks.
The Autazes project aligns with the National Fertilizer Plan’s goal to increase domestic potash production to at least 2 million tons per year by 2030. Additionally, the project emphasizes environmental, social, and governance (ESG) goals, focusing on responsible waste management, minimal surface impact through underground mining, and leaving beneficial infrastructure for community use upon closure. The project also prioritizes local employment by planning to hire 80% of the workforce from the region and providing necessary training for skill development.
Brazil’s economic outlook in 2024 is already off to a good start, with growth projections driven by agriculture and boosted by household and government consumption that could grow with further numbers reported in coming months. Foreign Direct Investment continues to be a main driver, with a focus on the renewable energy sector and the potash market and the Autazes Potash Project, in particular, to boost Brazil’s agricultural industry and contribute to the global potash market. As Brazil continues to attract foreign investment and foster growth in key sectors, the country is also expected to maintain its status as a leading economy in Latin America, something President Lula de Silva has made a priority for his administration and the future.
